Another ClimateTech Podcast
Another ClimateTech Podcast is a weekly interview series that explores the fight against climate change through the lens of entrepreneurship, investment, academia, activism, and art. Join Ryan Grant Little, a seasoned climatetech founder, advisor, and investor, as he interviews the climate warriors trying to save us from ourselves.
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Another ClimateTech Podcast
Nature needs a better bank, with Martin Stuchtey of the Landbanking Group
Martin Stuchtey is the founder and co-CEO of The Landbanking Group, which aims to support the regeneration of nature and biodiversity through an asset class they call Nature Equity.
Martin talked about how we can protect nature by literally putting a value to it, as well as his own life and career which has ranged from soldier in the German army’s alpine group to management consultant, professor, and now founder.
#biodiversity #regeneration #climatetech
Promo partner for this episode is Grizzle, helping B2B ClimateTech companies generate demand and customers through high-quality content, social media, and SEO services. Podcast listeners can book a free consultation here.
Welcome to another Climate Tech Podcast interviews with the people trying to save us from ourselves. In this episode, I spoke with Martin Stucktey, founder and CEO of the Landb anking Group, which aims to support the regeneration of nature and biodiversity through an asset class they call Nature Equity. We talked about this and also his own life and career, which has ranged from soldier in the German Army's Alpine Group to management consultant and now founder. I'm Ryan Grant. Little Thanks for being here, Martin. Welcome to the podcast, Ryan. Good morning. You founded the Landb anking Group just under two years ago and you describe it as a company with the ambition to change the way we use land and reward nature. Can you talk about what that means concretely, If you think about it?
Martin Stuchtey:the mother or the father, in this case, of all market failures is the way we deal with land. In the end, our social well-being, our ecological well-being, is the sum of all the individual land use choices that we make every day, every morning, hectare by hectare, everywhere on the planet. It's done by many, many people who seek for good livelihood and currently those land use decisions are always skewed towards extractive use. It's the only way to make a living. That is at a moment where we know that land is where we get healthy food from, where we get energy from where we get water retention, from where we get carbon storage, from where we get biodiversity from where we get temperature regulation from. All of that comes from the land. Obviously, we don't take decisions that actually add up to the social well-being that we as a society are looking for. That hasn't been like that all the time.
Martin Stuchtey:If you actually go back in history, which is quite an interesting journey, there was a moment, the very beginning of economics, where land was the only legitimate production factor. The so-called physiocrats. François Kisny, he made this point. He said that it's the only source of wealth labor, capital. In fact, they're less important, they are sterile, if it wasn't for the potency and the fertility of land. We've lost that completely.
Martin Stuchtey:Then we went into a completely different school of thought. That was the classicals, the neoclassicals. They always looked at the marginal pricing, where the value of something was equal to the price and the price was equal to the marginal utility. The marginal utility of land particularly if you can expand it because there's always a new frontier actually was seen very little. We ended up in a mindset that land is worth nothing if it wasn't for human ingenuity and for capital and labor. Now we are finding out that in fact these production factors are sterile. There was nothing if there wasn't fertile land, and it took us to grow to 8 billion and it took us to get into a 1.5 degree world to find out that there is intrinsic value that comes with thriving nature and the land on which that sits. Land banking group. Long story short is the attempt to reward Belaland use decisions for everyone worldwide.
Ryan Grant Little:In that answer you used two words, price and value, which these days are probably far too often interchanged. You've said once before that, in reference to nature, that everything must have a value, not everything must have a price. I like the way that sounds and intuitively that feels right, but I wonder if you could talk a little bit about what you meant by that.
Martin Stuchtey:Nature has value and we all feel it, we all know it. That's where we like to spend time. 85% of us have nature as a screensaver, so it must be a reason for that. It seems to be part of our fiction of wealth, of our fiction of value, but it doesn't have a price. So the landscape that you look at on your screensaver, in fact, is not creating any GDP. It's anything between neutral and negative, even if a dump site would be GDP positive versus the use as a current landscape.
Martin Stuchtey:In a way, if you're thinking about it, there is such a massive divergence between our intuitive sense of value and our economic sense of value, which is reflective of a world where we always knew nature or beauty was there anyway. But now we are finding out that nature is in fact depreciating to use the word of harte das Gupta and we are not reinvesting into it, and so that means that we have to change that. One way of changing that is just to recognize the value and to protect it for its spiritual value, for its cultural value, and another part of that actually is to reward it, and for that we need to give it a price. So the first step is to give it value, and then there will be domains in which we find out the best way to protect it Is actually to give it a price, but it's not the other way around, that it's the price and the market that solves the problem. The first step is for us to discover that it is of value.
Ryan Grant Little:Can you talk a little bit about how the land banking group is doing this? What are your products? What are your services? Who are your customers?
Martin Stuchtey:It's super simple. So we go four steps. The first step is we've built a technology it's called land on the IEO it works, so we also find it in the web which has the ability to give every pixel of the planet an ecological passport with regard to its biodiversity, with regard to its carbon, so quality and water. We call that the nature capital account, and we like that word a lot because it also links back to UN natural capital accounting. The second step is then to use that nature capital account as a reference point, as an underlying for the issuance of nature service agreements, so every land steward can enter a contractual relationship With anyone who is in need of positive nature outcomes. These are businesses, these are insurances, these are offset us contributors, investors, governments, whatever. So it's the ability to create environmental or nature capital contracts at scale through a modern contracting engine.
Martin Stuchtey:The third step, then, is to take these contracts. We gave them a name, we call them nature equity, which we think actually might be a good candidate for Heart currency that actually conveys the attribution rights to nature capital. So nature equity contracts we take them and we help our customers to bring them on the balance sheet. I think that's an important one because so far, when you put money into nature, it always is either philanthropic or it runs through your PNL and nature equity was. Every one of those contracts has a biological or a bio physical twin back in nature, so it is anchored in a nature capital account, it is collateralized.
Martin Stuchtey:Through that they actually qualify as a balance sheet asset, and that is anything between boring and technicality and real paradigm shift, because that's an also linking back to your former question, ryan. It's the moment when we start looking at nature improvement as a source of wealth, as something that deserves to be investable, and it's the moment where we've created a new currency that has value to you because it shows that your value chain is safe, which shows that you are insurable, which shows that you are contributing, which shows that you are storing value. And all of this you can only do if you have a trusted contract, and nature equity is a way to bring together nature tech and fintech to create A very high quality of trust, a contract. So that's what land banking does interesting.
Ryan Grant Little:Okay, so I think I understand the mechanics of it. Can you give an example of one of the projects, or you know a location and a customer and how they work together?
Martin Stuchtey:Currently most of our work is within set us. So these are companies where that feel that they actually are increasingly exposed to nature risk, to the default of ecological systems, and they want to protect themselves from that nature risk. So because nature risk was theoretical in the past, it's real now. No oranges from the Mediterranean, no hope for your beer. No home insurance is in California anymore for wildfire risk, no coffee and chocolate.
Ryan Grant Little:Doesn't my coffee chocolate coffee or?
Martin Stuchtey:a car anytime soon, which is a particularly blow to most of us. Is this real now? So welcome to a 1.5, soon 2, degrees world. In such a world, you as a food brand or you as a cosmetic brand, you want to know whether your growers are actually improving nature capital every year, whether they are more and more shadow trees, whether there's more and more so organic matter with a water holding capacity is increasing, whether they still abundance of pollinator insects. You want to know, you're even prepared to pay for it, but it's a very difficult problem for you to solve. It's a complex, multi polygon, multi tier problem and it's very heavy on your PNL.
Martin Stuchtey:So having a platform that actually allows you to sign on thousands of polygons to assess them automatically, so automatic MRV. Then to have what an MRV? That's a monitoring, reporting, verification. So basically, that's the ecological assessment, the stock of nature capital at any moment in time.
Martin Stuchtey:So, and then to have a nature capital asset management system where you can see on your screen here the projects, here is the total amount of nature capital under management, and then to take that to your charted accountants for them to look at it and say, okay, I got it. This is a real investment in the viability into your business. So that's the easiest of examples, that's the insetters, everyone who has exposure within the value chain Food chains is most evident and that's also where most of our activities are now agri, food chains, cosmetics but we see the same in energy. We see the same in mining. We just see the same in construction. Very soon afterwards, we think that insurances can not afford to invest into nature uplift anymore and very soon we think that also banks, financial investors, institutional investors will actually have need tools to manage nature exposure of their portfolios. And for everyone we can offer the land platform as a solution to that challenge.
Ryan Grant Little:I would love to be a fly on the wall at board meetings of insurance companies in twenty twenty four. I can't imagine you know some of these conversations that they're having, because we're living in a world that's increasingly Uninsurable.
Martin Stuchtey:Uninsurability is going to be a word that will haunt us in the future. I mean, if you decide, as a major insurance company, to step out of the California home insurance market, which is a big part of the insurance market there, that comes with quite a cost and for the first time, you would actually think hard. Is there anything that we can do to manage nature, risk ourselves, to ensure that there is a forestry that is actually resilient to wildfire risks, or should we actually make our insurance premium contingent on whether our customers are investing into nature? And so, for the first time, we really are forced to understand how do we actually invest into the resilience of ecological systems?
Ryan Grant Little:I want to change gears a little bit and talk. You've had a really interesting career, to say the least, and I want to explore that a little bit and find out how you made some of the decisions that you made, going from Soldier in the Alpine forces to geologists, to management consultant. I want to start with management consultant. You spend, I think, the lion's share of your career at McKinsey Twenty years or so, eventually becoming the managing partner of the Munich office and you've done a lot to bring the topics of environment and sustainability forward. You've set up different kind of groups within McKinsey focusing on this. But McKinsey also famously has some of the brightest minds working there, but infamously working a lot of times on mandates that are contributing to climate change. And I wonder what your view is in twenty twenty four, of the responsibility of big business and its management consultants on this topic specifically.
Martin Stuchtey:Look, I think, first of all, we all have responsibility. We can't be the children of enlightenment. Look at the numbers of what's happening to our societies, what's happening to climate, what's happening to biodiversity, what's happening to our planet, and continue to do business as usual and run what used to be a normal career. We can't that is true for every individual, for every professional, for every consultant Consulting put itself a bit on the line, frankly, because all consultancies are taking the sustainability trend with both hands as a gross engine. And you can't do that if, at the same time, you commit your organization to a Paris compliant development pass. And that means that you have to make choices. You can't take advantage of greening and, at the same time, take advantage of serving industries that are deliberately not consistent with 1.5 degrees, so that are consistently not consistent with SDGs, not consistent with Montreal. You can't, so you cannot have the cake and eat it and you have to make some hard choices.
Martin Stuchtey:I see that sometimes I don't see enough of that. So I think in the long run, as ever, this will not only be required, it will also be attractive to consultancies, because it's the only way to pull the talent, it's the only way to create a space where talented people are solving problems. You can't have that if there is a secret little lie that you're also serving interests that are not consistent with Paris. So I think it's. We are all up to a character test, and the more you expose yourself, the tougher the character test is going to be on you.
Ryan Grant Little:You talked about Paris and Montreal. You mentioned there as well. You were at COP 28 in November and the biodiversity COP 15 in Montreal in 2022. And my impression is that you're regular at these events and I'm curious about what your impressions are at these events, how they've developed kind of over the years. Are they going in the right direction? I know that at COP 28, they had three times as many food lobbyists as the year before, which is concerning for me as someone working primarily in alternative proteins. I wonder if you could just kind of talk about what the feel is and how that's changing for better or worse over the years.
Martin Stuchtey:I think you're barking up the right tree here. These things are ambiguous at best. It's very easy to be super cynical about it. How the wrong people turn up, how we are embedding ourselves in full certainties so we are indulging in this sense of community. How we are not recognizing that we as a community may also turn into part of the problem, because we also have developed a bit of a business as usual in the way we are trying to drive the climate agenda. All of that is true. However, I happen to think that the alternative is much worse.
Martin Stuchtey:Particularly now, with the near complete breakdown of multilateralism, with the return of geopolitical agendas, with war, it's important that people talk. And isn't it cool that the cops are now almost out competing with the world economic? For in terms of attendance and vibrancy, I mean, at least you have people discussing the right stuff and being driven by the right question. And in the end, we have to recognize that progress requires everyone to come on board and, for example, fossil interests, what we might not like it, they need to be part of the conversation and Come 28, I think in hindsight we will say this is all the evidence, despite some of the hypocrisy and despite some of the vested interest.
Martin Stuchtey:In the end, it was good to have all of them at the table and to have also leadership that is able to talk to all parties. So, on balance, it's good we have these things. We need to be super, super critical with ourselves, not with the others that we have to do as well, but we also need to be super critical as a climate community, not to be lenient with ourselves, and I see a bit of that. We also have to shake ourselves up, be bold, be naughty, be innovating, but also be surprising. We have to break the patterns and we are also part of the polarization game and we need to be the ones to find new ways to find openings, and we don't do enough of that.
Ryan Grant Little:Yeah, it's interesting. The way I look at this is we're so used to seeing change come through, kind of incrementalism, and then you know, some occasional big breakthroughs, and that has worked for, you know, for Decades and centuries, but we haven't been so much on the clock right. We haven't had a force that doesn't kind of care what our timelines are working against us, which is basically what the rising temperatures is right now. And so I wonder, you know, do we need to focus on the moon shots and the big breakthroughs rather than kind of the incremental change that I feel like has been Part of our movement for a long time?
Martin Stuchtey:but we have to make sure that we are not getting the victims of this dynamic a. We live in a world where there is so much polarization and hate speak and secondly, we live in a world where we are running out of time on climate, and that does something to us as a community, so we are getting as tense as everyone else. We will be winning if people look at us as the ones who can still listen, who can still emphasize, who can still come up with an unusual idea, who are surprising with their generosity and understanding. So we need to be the opposite of what's currently happening to us. We've lost much of the support that we so urgently need at this point and we need to ask ourselves how that happened. The reason is not just the others. There's so much bitterness in the way people look at the climate agenda now it's so easy for others to weaponize it. We have to question our ways.
Ryan Grant Little:Absolutely. Yeah, I totally agree with that. So when you're traveling around to these big conferences, you've got a startup, but in addition to all of this, you're an alchemist and interested to hear more about that one. An organic farmer and alpinist, father of six. If I were to put this in one question how?
Martin Stuchtey:Probably because I'm mediocre in everything I do, a lot of capacity to do, I don't know. When I was born, luckily a dhs wasn't invented it was not an available condition. So I just try to do many things and see many things, and now where I ended up in life is just the consequence of that. I've never planned a lot. The one thing that I sort of I guess I did with consistency is apart from marriage, is so I spend quite a bit of time at mckinsey, which served me well because it's a very first of all. It was was good years.
Martin Stuchtey:I was very critical with my professional moment ago and very, very grateful for the friendships and very grateful for the learning, some very grateful to have to be exposed to really, really complex problems.
Martin Stuchtey:A lot of the stuff that we're doing now Wouldn't be possible if it hadn't been for that apprenticeship.
Martin Stuchtey:But most of all, survive that work quite well because there's a new idea and you problem to solve every day and that made it Very entertaining all along. In the end, we have to live authentic lives and that's perhaps something about all the next, all the challenges that we have today, where we see how spaces are narrowing. I think we are coming to a point now where we see a lot of the stuff that we did conventionally in the past doesn't work, and that translates into freedom because we are not up against any proven orthodoxy anymore. That can be quite liberating. I mean, you can just sort of in the past. You always try to look nice in the eyes of an established convention and you ask yourself am I doing it right? And today you don't have to do that because these conventions, many of these conventions, have been proven wrong, and so that gives space for us to live our authentic self and to do what we believe in, what we think is right to do, although for startups working in the space.
Ryan Grant Little:I would imagine that you know we're still dealing with the vestiges of a capital system that hasn't caught up with this as well. So and I think we're seeing that very much in twenty twenty three and twenty twenty four now that we're still using a lot of old thinking In the capital markets as we try to solve new problems and new kind of expensive problems where there's, we don't always know who the ultimate payer is for this.
Martin Stuchtey:And that's why we so firmly believe that the only hack that we can play to the system is to reintroduce the notion of value for nature, for social goods. So, rather than there's very little capacity in our society right now to accept extra burdens, to accept more rules, I think, even if it feels like the first best solution, like the Pareto efficient outcome, I think the what we really need to do. We need to have a revolution of what we consider to be of value. And once we see that nature is of value by the way, we've seen these things before A Picasso is worth twenty dollars when it just comes to the canvas and we've decided it's worth twenty million a car, sort of a brand, an idea, a club right, all of these things that are worth nothing or everything, depending on how we look at it, and sort of.
Martin Stuchtey:If we create a positive fiction of wealth around the things that really matter by diversity pristine landscapes, water sheds, clean air, temperature regulation If we create a fiction of wealth around these things, then all of a sudden capitalism can turn back to what it should be a useful engine to help us organize our economies. But first we need to change our fiction of wealth. Prosperity, two point zero. I think it's the only, the only way, the only answer that I can still think of, after having tried so much actually to work on our fiction of wealth.
Ryan Grant Little:Indeed, yeah, the idea of I was a baseball card collector as a child, so I know I internalize that early, and hopefully these days we can find a way to value nature more highly than non fungible tokens of bored monkeys, where career is as varied as your life is rich today, and so I just want to name a few of the careers that you've had. You were a soldier in the German armies, alpine forces, a geologist, a farmer, a management consultant, an investor and now a founder, and so that's not a straight line. I know a bit about this as well. If I look at my career and I've heard you ask, in the 21st century, what is a career, what is prosperity and what is a good life? And as my last question to you, I'd love to hear your answer to that I think the only currency that counts in the world is your children.
Martin Stuchtey:To to talk about you was saying that you are cool.
Martin Stuchtey:The only thing that matters, and they don't think I'm cool all the time. By the way, there's also you haven't talked about the other side of me, but overall it's a good measure of whether we do the right stuff to see how your children look at you and how they want to spend time with you and do the right stuff to do together, and so we are quite blessed with having children who sort of like to live this kind of life and find it liberating to depart from a conventional idea of a career but just live our true self. Much of what you talked about has not been, is not a personal sort of, has neither been a personal choice nor personal achievement. It's just the gift that from others, and it's the gift of the last decade. I mean. That's also something we forget.
Martin Stuchtey:I was born in the late 60s. This was a golden generation. We had a peace dividend, we had an economic dividend, we had a globalization dividend. We had it all. We had it all. We had all the benefits and we didn't have to pay any of the price for it, and so we have reason to be grateful and we should use that to translate that into responsibility that other generations can also say we have been gifted. We have been a golden generation. Currently, we seem not to be so generous to allow the next generations to say that, but we should.
Ryan Grant Little:I think that's really well put, and let me just say that if you have six kids and they all think that you're cool, you're definitely doing something right, martin.
Martin Stuchtey:So next time round you should talk to them and test everything.
Ryan Grant Little:I've said here In the meantime, where is the best place for people to find you online if they want to get in touch?
Martin Stuchtey:Look, you find me on LinkedIn and you find me on thelandbankinggroupcom and you find us on landlaio. And test our tool and give us feedback.
Ryan Grant Little:Amazing. I'll put all of those links in the show notes as well, martin. Thank you so much for being here. Ryan, thanks for taking the time and a good conversation. Thank you Thanks for listening to another Climate Tech Podcast. It would mean a lot if you would subscribe, rate and share this podcast. Get in touch anytime with tips and guest recommendations at hello at climatetechpodcom. Find me, ryan Grant Little, on LinkedIn. I'll be back with another episode next week. Bye for now.
